BILL ANALYSIS
SB 120
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Date of Hearing: July 6, 2009
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Felipe Fuentes, Chair
SB 120 (Lowenthal) - As Amended: July 1, 2009
SENATE VOTE : 23-14
SUBJECT : Residential Tenancies
SUMMARY : Allows residents of single-unit dwellings to take
over a utility service account when the account is in arrears by
the owner and pending termination. Requires the utility to
provide notification of service termination in writing and in
multiple languages, as specified.
EXISTING LAW :
1) Requires a corporation, public utility, or district
furnishing individually metered residential utility service to
residential occupants in a multiunit residential structure,
mobilehome park, or permanent residential structure in a labor
camp, where the owner, manager, or operator is listed as the
customer of record and the account is in arrears, to make a good
faith effort to notify the residential occupants that service
will be terminated at least 10 days prior to termination.
2) Requires a corporation, public utility, or district
furnishing master metered residential utility service to
residential occupants in a multi-unit residential structure,
mobilehome park, or permanent residential structures in a labor
camp, where the owner, manager, or operator is listed as the
customer of record and the account is in arrears, to make a good
faith effort to notify the residential occupants that service
will be terminated at least 15 days prior to termination.
3) Provides that if the corporation, public utility, or district
allows the residents of an individually metered or master
metered multifamily dwelling, mobilehome park, or permanent
residential structure in a labor camp to take over the accounts
that were the obligation of the owner, the residents may deduct
their monthly utility charges from their rent.
THIS BILL :
SB 120
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1) Adds single-unit structures to the dwelling types whose
residential occupants must be notified of service termination by
a corporation, public utility, or district furnishing
individually metered residential utility service.
2) Allows residents of single-unit structures to take over
individually metered residential service accounts that were the
obligation of the owner if certain conditions are met and then
deduct their monthly utility charges from their rent.
3) Requires notice of service termination by a corporation,
public utility or district furnishing individually metered or
master metered residential utility service, to be in writing and
in the following languages: English, Spanish, Chinese, Tagalog,
Vietnamese, and Korean.
4) Clarifies that when a residential occupant takes over a
delinquent service account, they need only assume responsibility
for the subsequent charges to the account.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to establish a uniform set of rules when a landlord fails to pay
a utility bill whether the rental property is a single-family or
multifamily home. This bill would grant parity to residents of
single-family dwellings so that all tenants in a foreclosed
property are not unfairly denied utility services.
Due to the current mortgage foreclosure crisis, renters are
increasingly faced with unexpectedly losing their utility
services as a result of landlords not paying the utility bills.
According to the author, this bill helps tenants caught in a
foreclosure to maintain their utility services by addressing two
issues: taking over service accounts and proper notice.
1) Taking over service accounts : Under current law, a
residential occupant of a multi-unit dwelling may assume
responsibility for paying individually metered service charges
from a public utility, corporation, or district and deduct those
charges from any rent owed if the services are included in the
rent. This bill would extend the same right to residential
occupants of single-unit dwellings. According to the author,
such an expansion is much needed because single-family homes and
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condominiums are the types of rentals most often affected by
foreclosure.
This bill also clarifies some ambiguity in the law when a
residential occupant takes over a service contract. Under
current law, if one or more of the residential occupants are
willing and able to assume responsibility for the "entire
account," the provider must make service available to the
residential occupant if certain requirements are met. This bill
clarifies that the "entire account" refers to only the
subsequent charges to the account, not the charges in
delinquency.
2) Notice : Current law requires that service providers make a
good faith effort to notify residential occupants that
individually metered service will be terminated at least 10 days
prior to termination when an account is in arrears. This bill
would require that the notification be in writing and in
English, Spanish, Chinese, Tagalog, Vietnamese, and Korean.
According to the author, these changes will ensure that tenants
are given better actual notice since oral notification may be
unfeasible and/or the tenant is a non-English speaker.
For master metered service, providers are subject to more
extensive notification requirements, such as providing written
notice posted on the door or if unfeasible in common areas and
at each point of access to the structure or structures. The
notification must also inform the residents that service will be
terminated and that the residents have the right to take over
the service account. This bill would require notification to be
in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean,
thereby ensuring that non-English speakers are equally informed
and protected from service shut-offs.
3) Recent Amendments and Federal Legislation : As introduced, SB
120 would have clarified that lenders foreclosing on rental
properties are responsible for the return of tenant security
deposits. However, recently enacted federal legislation now
covers many of the concerns that originally prompted the
introduction of SB 120. More specifically, in May of this year,
President Obama signed into law the "Protecting Tenants and
Foreclosure Act of 2009," which provides that foreclosers assume
properties subject to the rights of any bona fide residential
tenants, including the return of security deposits. As a
result, the portions of SB 120 that are now covered by the new
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federal legislation have been removed.
Recent Related Legislation : AB 2586 (Torrico, 2008) was
contained provisions that were substantially the same as the
introduced version of SB 120. AB 2586 would have generally
provided that a person or entity that acquires property as a
result of foreclosure is the landlord's "successor in interest"
for certain purposes and takes the property subject to the
rights of the tenants, as specified. AB 2586 was approved by
the Assembly Utilities and Commerce Committee on a vote of 9-2
in 2008. This bill was ultimately vetoed based on provisions of
that bill that are not contained in AB 120.
AB 1333 (Hancock, 2008) would have required that the successor
in interest in a foreclosure keep up the payments for utilities
provided to a property or its tenants, under specified
circumstances. This bill was vetoed.
SB 1137 (Chapter 69, Stats. Of 2008) provides, among other
things, that tenants must receive notice of a pending
foreclosure on the rental property and must receive at least
60-day notice to quit.
REGISTERED SUPPORT / OPPOSITION :
Support
City and County of San Francisco
East Bay Municipal Utility District (EBMUD)
Opposition
None on file.
Analysis Prepared by : Mariko Yoshihara / U. & C. / (916)
319-2083